n.b. – This story first appeared in the APEX Editor’s Blog on 7 February 2013

Earning airline points at a hotel stay is not a new benefit; many hotels and airlines have partnerships allowing accrual of points. For elite members of Delta’s SkyMiles programme and Starwood Hotels’ Preferred Guest (SPG) programme, however, things are about to get much more interesting. The two companies today announced a newCrossover Rewards programme, launching an industry first integration of loyalty programme benefits, earnings and elite tiers.

The new programme is focused on both company’s most valuable customers – Delta Medallion members and SPG Elites, respectively, with the benefits squarely targeting that market. Both Delta and Starwood will allow these guests to earn points in both programmes with every flight or hotel night. In addition, the top-tier elites will receive reciprocal elite benefits at the partner, offering a strong motivation to those passengers to shift their travel patterns.

All Delta Medallion members will earn one SkyMile per dollar spent on room rates at Starwood hotels, in addition to the Starpoints they would normally earn for the stay. For Platinum and Diamond Medallion members the benefits are even greater; they will receive most of the same benefits as SPG Gold elite members, including priority check-in, late check-out, upgraded rooms (where available) and complimentary internet access.

For SPG elites the earning system on Delta flights is similarly structured. One Starpoint will be earned for each dollar spent on Delta airfare, excluding taxes, fees and surcharges. And, for Platinum elites, there will be additional benefits available on the day of travel, comparable to those of SkyMiles Silver Medallion members. These benefits include one free checked bag, access to priority check-in lines and priority boarding with the Zone 1 group.

The two companies are making a bet that these new benefits will drive incremental revenue and loyalty across both groups. For the very loyal to either programme but not the other there is a reasonable draw to now more strongly consider the partner. Saving $25 in checked bag fees or $20/night on inflight connectivity can be a major draw for customers, and that’s before things like upgrades and shorter lines come in to play. Plus, there is a very good chance that customers traveling enough to earn elite status will be a bit obsessed with points, and the ability to now earn in both programmes at the same time is quite significant. This integration is far deeper than Hilton’s Double Dip programme, to date the only other scheme which consistently allowed earning of both hotel and airline points on a hotel stay.

This new programme also provides some insight into potential changes coming in the loyalty industry. Delta has already indicated that it plans to tie Medallion status to spend in coming years. This earning scheme is also tied to dollars spent, not distance flown nor nights in a hotel. And other carriers, including Southwest and JetBlue, have already tied their loyalty programmes to spend. For many customers the furthering of spend-based earning may be a significant downgrade to the programmes’ value. We’re not quite there yet, but the writing is on the wall.

Separately, Delta recently announced adjustments to earning status in the four tiers of the SkyMiles elite Medallion scheme; the carrier introduced a dollars spent element for customers to qualify as a silver, gold, platinum or diamond Medallion member.